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On 22 April, India along with at least 100 other nations signed the Conference of Parties (COP) 21 Global Climate Agreement in New York. While the agreement has been hailed as a great step towards climate change adaptation and mitigation, what still remains to be seen is whether it would make developed nations honour their commitments in so far as promises of technology transfer and funds transfer are concerned. Developing countries such as India which has voluntarily committed to generating 175 gigawatt of renewable energy by 2022 and would require an estimated funding of about $2.5 trillion by 2030 as per its Intended Nationally Determined Contribution may find it difficult to meet its overall adaptation and mitigation targets without due financial support from developed nations.

Climate financing, as they call it, has been the most contentious issue at all climate change conventions including the latest COP in Paris last December. After almost every COP, we hear that developed countries would provide the developing one’s funds for climate change adaptation and mitigation. At the Copenhagen COP, the Green Climate Fund that was established with a target contribution of $100 billion by 2020 has not evoked much excitement with developed countries still dragging their feet in contributing to the fund. To add to it, the Paris COP instead “encourages” developing nations to join the climate finance on voluntary basis.

At the same time, coal has been made the clear culprit. The irony is that despite having one of the largest reserves of coal, India is not in a position to use much of it to fuel its growth story. It has instead chosen to impose a green cess of Rs400 per tonne on coal while also launching what is supposedly the world’s largest renewable energy programme with targets set for 2022. While clean coal technologies are the way forward, let us not forget that adopting new technologies comes at a price. The ambitious renewable energy programme in any case requires huge amount of funding. With the prospect of relying on developed nations for funds being bleak, India is left with the option of self-funding its green growth. Uncertainty, it is said, is the refuge of hope and with climate financing being as uncertain as it has been in the past, India can only hope to rely on itself with some certainty.

India has chosen to do just that and this is possibly why we have a newfound focus on what we call “green bonds”. While there is no standard definition of what green bonds are, a layman understanding of it points at the money raised through such bonds being used for “green” or “environment-friendly” projects. We still need some clarity on what would actually qualify as such green projects. The Securities and Exchange Board of India (Sebi) approved the proposal for disclosure requirements for issuance and listing of green bonds in January 2016 but it failed to define “green bonds”. Instead, it has kept to itself the onus of defining as to what would qualify as “green bonds”. While it has made external review optional, created a mechanism for tracking the proceeds and the projects in which they are being used through periodic reporting, it would have fared better with a bit more clarity regarding the definition itself.

The Sebi guidelines, in any case, are clearly in consonance with the International Capital Market Association’s (ICMA) green bond principles which essentially call for transparency and integrity in the entire process of issuance of green bonds across the world. The four components as laid down in the principles regarding use of proceeds, process for project evaluation and selection, management of proceeds and reporting have been more or less addressed by Sebi. It would have really helped if just like ICMA, Sebi would have also published an indicative list of projects which would qualify to seek the benefit of its green bonds scheme. The principles published by ICMA include projects relating to renewable energy, energy efficiency (including efficient buildings), sustainable waste management, sustainable land use (including sustainable forestry and agriculture), biodiversity conservation, clean transportation, sustainable water management (including clean and/or drinking water) and climate change adaptation.

Interestingly, India is already focusing on each of the green categories of projects, be it launching the ambitious renewable energy programme, allocating Rs40,000 crore under the Compensatory Afforestation Funds Bill, 2015 for the green India initiative, streamlining the waste management laws or proposing to implement the Bharat Stage VI fuel norms by the end of this decade. Energy efficiency, agriculture, forests and biodiversity, clean transportation and drinking water management are already high on the priority list. It is therefore time that more operators enter the fray which has predominantly been led by a few banks and energy companies. Leave alone the return on investment, green bonds are a definite reputation enhancer.

Nawneet Vibhaw is a managing associate at Luthra and Luthra Law Offices and a part of the firm’s environment and policy practice. He is a member of the International Union for Conservation of Nature World Commission on Environmental Law.